Britain would face a significant fall-out from a Greek economic collapse and
exit from the eurozone, with banks, businesses and consumers all suffering
from the shockwaves.

Greece may account for only two per cent of the EU’s annual wealth, but its exit from the single currency would quickly have major ramifications for other heavily indebted European countries, to which British banks, and the economy as a whole, are heavily exposed.

George Osborne, the Chancellor, has warned that the impact of a Greek exit would be “as difficult perhaps as any our country or our continent has faced outside of war”. In the short term, the value of savings, investments and pensions tied up in stocks and shares would suffer from the inevitable market turmoil that would follow a disorderly Greek exit from the euro. The cost of borrowing for British consumers would also rise while the availability of credit, such as loans and mortgages, would be further restricted because of the exposure of British banks to the eurozone turmoil.

The run on Greek banks that could follow a euro exit – withdrawals have already hit £643 million a day – would start a panic as investors and savers across Europe attempted to move cash from financial institutions in Portugal, Spain, Italy and France that are seen as weak or which have lent heavily to Greece.